Merger and Acquisition Advisory Post-Merger Integration Deal Value Realisation

MERGERS AND ACQUISITIONS FOR SMES – AN OVERVIEW EXECUTIVE SUMMARY

CHALLENGES FACED IN M&A

Companies have two strategic routes to growth -

M&A is not Business as Usual. Failing to properly

Build or Buy. Building the business organically is

manage M&A means the deal benefits will not be

less risky, but will take longer to deliver results.

delivered, and may put the whole business at risk.

Inorganic growth through Merger and Acquisition (M&A) can achieve your objectives more quickly but has the potential to be riskier, with higher up-front costs.

Most businesses do not have the skills, experience or bandwidth to manage this successfully. Leaders cannot dedicate the time needed to manage the end-to-end M&A process, particularly during

In bringing two companies together, opportunities

integration. This cannot be treated as a side activity.

for growth and cost synergies must be sought over

The complexity and effort of managing an

and above the intrinsic value of each business. It is

acquisition must not be underestimated.

these Value Drivers that enable a successful deal to deliver an outcome that is greater than the sum of its parts. However, the definition and delivery of these requires careful planning and management, with a clear understanding of the risks involved. In addition to the successful delivery of the Value Drivers, business transformation will be needed changing the Operating Model. This change will

The challenge for an acquirer is to successfully realise the Value Drivers and deliver Operating Model change, while maintaining the value and performance of both underlying businesses. Many specific problems will be faced, such as: •

must be prioritised to maximise benefits while

depend on the level of Integration, i.e. the degree

also covering the ‘must-do’ operating model

to which the two businesses are combined. This

changes. External support to manage the deal

Operating Model change can add significant further

will allow management to focus on the business.

complexity to the deal. Business owners and senior managers are busy

•

Existing revenue streams must be protected to

about M&A processes or running an Integration

preserve the baseline revenue. Management

programme. Managing M&A deals can easily be a

must focus on running the business while a

full-time role and attempting to balance these with and business failure.

project team manages the integration. •

and cost control. Risks, issues, assumptions and

1

on investment . deals can actively damage the business, destroying shareholder value and impacting ability to compete. Can you guarantee your investors that you can

Maintaining Control – Strong governance and oversight is needed to ensure benefit delivery

75% of M&A deals fail to deliver a clear return In the worst cases, poorly selected or managed

Maintaining Business Performance – There is often a dip in performance after a deal closes.

enough running their companies without learning

day-to-day responsibilities can be a catalyst for deal

Resource Constraints – Company resources

dependencies must be carefully managed. •

Financial Tracking – The realisation of Value Drivers and Synergies must be tracked against the plan using clearly defined metrics and KPIs. The Integration budget to deliver these and the

make a success of your acquisitions?

operating model change must be developed and

RitchieHogg can help you make thi